by Linda Beale
crossposted with Ataxingmatter
The Pew Trust has published a study of the cost of extending the Bush tax cuts: Decision Time: The Fiscal Effects of Extending the 2001 and 2003 Tax Cuts. As surely all ataxingmatter (and Angry Bear) readers are aware, the Bush tax cuts were enacted with sunset dates. Some of those sunsets were 2008 but were extended to 2010. The Bush Congress intended to make the cuts permanent, but knew the price tag would be too high. So instead they used the sunset gimmick to pretend that the tax cut wasn’t really a major cause of increasing deficits.
Now the bill is due. And of course, Congress is today debating an “extender” bill for many of those cuts, that will be financed, at least, by other revenue increases, unlike the original Bush cuts.
Obama’s 2011 budget proposal calls for extending most of the tax cuts –i.e., Obama does not want to let the 2000 rates return as slated under current law for those singles earning less than $200,000 or couples earning less than $250,000. But he’d let the old rates return above those thresholds.
What’s the cost of the Obama extension? A significant $2.3 TRILLION over ten years, according to the Pew Trust report. And debt would extend to 78% of GDP by the end of the 10 years (all else staying the same, which of course it won’t).
If the cuts were allowed to expire as they are slated to do under current law, we’d have $2.3 trillion more in revenue and the debt to GDP ratio would be cut to 68% by 2020.